UK-based Premier Foods has reached an agreement to sell its chilled bakery business Brookes Avana to the 2 Sisters Group as it focuses on eight ‘power brands’.

The deal comes soon after Brookes Avana lost a lucrative pie contract with retailer Marks And Spencer (M&S) and at a time when Premier is looking to clear debts of over €1bn.

Asked whether Brookes Avana was offloaded at a discounted rate given its assets and turnover in recent years, Lisa Attenborough, group director of communications at Premier Foods told BakeryAndSnacks.com: “It’s a fair price and right for us.”

She said that the group’s branded sales would rise around 7% once the Brookes Avana was completed.

Brookes Avana reported turnover of €238.7m in 2010 and had net assets of €122m million and gross assets of £147.4 million, including intangible assets of €172.8m

Lost M&S contract

In October Brookes Avana reported that it had suffered a trading loss of €15.5m in the third quarter, largely as a result of a failed pie contact with M&S.

M&S took the decision earlier this year to remove a large pie contract it held with Brookes Avana’s plant in Leicester.

“It had a significant impact on us and we had to make a number of redundancies,” said Attenborough.

She added that more redundancies were planned for next year as a direct result of the failed pie contract.

Power brands strategy

On 7 October, Permier’s new CEO Michael Clarke announced that the company was to focus on eight power brands: Ambrosia, Batchelor’s, Bisto, Hovis, Loyd Grossman, Mr Kipling, Sharwood’s and Oxo.

Attenborough confirmed that the company was still looking to sell “some selected businesses” outside the core brands.